Sunkist Growers, Inc. v. Winckler & Smith Citrus Prod. Co.

• Citation: 284 F.2d 1
• Decision Date: 30 September 1960
• Docket Number: No. 15242.,15242.
• Parties: SUNKIST GROWERS, INC., a Corporation, and The Exchange Orange Products Company, a Corporation, Appellants, v. WINCKLER & SMITH CITRUS PRODUCTS CO., a Corporation, and Ronald Walker, Trustee, Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

284 F.2d 1 (1960)

SUNKIST GROWERS, INC., a Corporation, and The Exchange Orange Products Company, a Corporation, Appellants, v. WINCKLER & SMITH CITRUS PRODUCTS CO., a Corporation, and Ronald Walker, Trustee, Appellees.

No. 15242.

United States Court of Appeals Ninth Circuit.

September 30, 1960.

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Ross C. Fisher, Herman F. Selvin, Los Angeles, Cal., Thomas C. Strachan, Jr., Frank F. Fowle, Melville C. Williams, Chicago, Ill. (Farrand, Fisher & Farrand, Los Angeles, Cal., Loeb & Loeb, Los Angeles, Cal., Pope & Ballard, Chicago, Ill., of counsel), for appellants.

William C. Dixon, Los Angeles, Cal., Holmes Baldridge, Chicago, Ill. (Harry M. Irwin, Los Angeles, Cal., of counsel), for appellee.

Before STEPHENS, BARNES and MERRILL, Circuit Judges.

BARNES, Circuit Judge.

This is a private action for treble damages under the Sherman Act, 15 U.S.C.A, §§ 1-7, 15. Appellants are Sunkist Growers, Inc., a corporation (hereinafter referred to as Sunkist) and The Exchange Orange Products Company, a corporation (hereinafter referred to as Exchange Orange or EOP). Appellees are Winckler & Smith Citrus Products Co., a corporation and Ronald Walker, as trustee of Winckler & Smith (hereinafter referred to as Winckler or Trustee). The action was tried in the district court before a jury, which returned a verdict of $500,000. This was trebled to $1,500,000, and from that there was deducted the $2,500 originally paid in compromise by one-time defendant TreeSweet. There were added attorneys' fees fixed at $195,000, and costs. Timely appeal was filed in this Court. After argument, but before decision, one of the judges hearing this appeal died. It was thereupon set down for hearing a second time, was heard, and held pending the determination by the Supreme Court of Maryland and Virginia Milk Producers Ass'n v. United States, 1960, 362 U.S. 458, 80 S.Ct. 847, 4 L.Ed.2d 880, having to do with the antitrust exemptions of agricultural marketing cooperatives.

I Parties

Sunkist Growers, Inc., a corporation, was sued in the district court originally under its former name, California Fruit Growers Exchange. It is and has been a nonprofit agricultural cooperative marketing association. The second defendant, The Exchange Orange Products Company, a corporation, was sued in the court below as The Exchange Orange Products Company. At all times it was a wholly owned subsidiary of Sunkist. Together with Sunkist and Exchange Orange, there was originally named as a defendant Exchange Lemon Products Company, a corporation, sued originally as Exchange Lemon Products Company, a nonprofit corporation (hereinafter sometimes referred to as ELP or Exchange Lemon).

On motion of plaintiff, Exchange Lemon was dismissed with prejudice as a defendant, and was subsequently named as a co-conspirator in plaintiff's second amended complaint filed February 2, 1956, to conform to proof.

TreeSweet Products Company, a corporation (hereinafter referred to as TreeSweet) was an original defendant, but settled for $2,500, and was dismissed as a defendant. In the said second amended complaint, it was referred to as a co-conspirator.

E. A. Silzle Corporation, a corporation (hereinafter referred to as Silzle) was never a defendant but was named a co-conspirator in both plaintiffs' first and second amended complaints.

Appellee Ronald Walker is trustee of the estate of Winckler & Smith Products Co. in those proceedings pending in the district court below for its reorganization under Chapter X of the Bankruptcy Laws, 11 U.S.C.A. § 501 et seq., being Number 538860-C of the records of said court. Mr. Walker was appointed March 26th, 1952 as such trustee, and by order made May 9, 1952 he was permitted to and did intervene in this case. Mr. Walker is sometimes referred to herein as appellee, Walker, Trustee, or as Intervenor.

Thus on this appeal there are two appellants, Sunkist and EOP, and two appellees, the Winckler corporation and the Trustee.

II The Theory of the Case

Appellees allege in their first cause of action (Section 1 of the Sherman Act; 15 U.S.C.A. § 1), and appellants deny, that appellants have conspired and entered into contracts which had the purpose and effect of unreasonably restraining interstate commerce in canned California citrus fruit juice, particularly single strength orange juice. This was proved, say appellees, by "six acts." These were:

(a) In the 1950-1951 canning season ELP processed 28,812 tons of oranges for EOP at cost, and without profit to ELP. Appellants admit this.

(b) During the same period, EOP processed 1,740 tons of lemons for ELP on the same basis. Appellants admit this.

(c) Sunkist and EOP agreed to establish and maintain the price of by-product oranges available to independent processors like appellees at a level making it impossible for processors like appellees to purchase oranges from EOP, or any other source, at a price or under any other arrangement enabling appellees and other processors to produce and sell canned natural orange juice and frozen concentrate juice at prices competitive with prices charged by appellants and their favored customers, TreeSweet and Silzle. Appellants deny these allegations.

(d) Under a contract effective July 23, 1951, between EOP and TreeSweet, TreeSweet received oranges from EOP, made single strength orange juice for EOP at cost and without profit to TreeSweet, and then bought the orange juice from EOP at Sunkist's then published price for single strength orange juice, less certain discounts not available to other customers, including appellees. The purpose and effect of this contract allegedly was to enable TreeSweet to obtain orange juice at a cost which prevented appellees from competing with Sunkist or TreeSweet in the natural orange juice market. Appellants admit the contract and supplying the oranges; deny the balance.

(e) Under a contract effective June 26, 1951, between EOP and Silzle, EOP furnished oranges to Silzle at $22.50 per ton, which was lower than the price to appellees or other processors. The purpose and effect allegedly was to give Silzle oranges at a price with which appellees could not compete. Appellants admit the contract and furnishing the oranges; deny the purpose or effect.

(f) EOP refused appellees a TreeSweet or Silzle type contract in 1951. Appellants denied the refusal but admitted such a contract was not made.

Appellees allege that as a result of the above acts of appellants (listed in (a) to (f) above), and the monopoly control of Sunkist and Exchange Orange in 1951 over the amount and price of Valencia oranges available for processing, appellees were unable to process natural and frozen concentrate fruit juice in competition with Silzle, TreeSweet and Sunkist, which alleged facts eliminated appellees as a competitor, and forced the filing of proceedings under Chapter X of the Bankruptcy Act. These allegations were added in the second amended complaint filed after the close of evidence. They were materially different from those in the original complaint. Appellants deny all these allegations.

Under the second cause of action (brought under § 2 of the Sherman Act; 15 U.S.C.A. § 2) it was charged that acts (a) to (f) above were done by appellants with monopoly control over citrus fruit markets in California and Arizona, and in so doing and in making such contracts, the parties named conspired to monopolize, and monopolized, single strength Valencia orange juice.

The second amended complaint additionally alleged contracts with independent processors Hyland-Stanford and Mission Dry, giving them first call on oranges and and processing to the exclusion of Independent Fruit Growers' Association and Morgan Ward, its selling agent, and one of the appellees' principal suppliers of by-product oranges.

Appellants plead five separate defenses:

First: The second amended complaint, the amended complaint, and the original complaint each failed to state a claim upon which relief could be granted.

Second: The applicable statute of limitations, Section 338(1) of the Code of Civil Procedure of California, bars all causes of action asserted in the second amended complaint and in the amended complaint.

Third: All causes of action alleged in the second amended complaint and the amended complaint are barred by the laches of appellees, in that appellees are barred by laches and estopped from relying upon any acts involving Silzle, as the Silzle contract was disclosed to appellees on March 14, 1952, and appellees did not amend their complaint to include this contract until December 15, 1954, and such a long delay was prejudicial to appellants.

Fourth: Appellees are barred by laches and estopped from relying on the Hyland-Stanford and Mission Dry contracts first referred to in the second amended complaint, as these contracts were disclosed to appellees on November 9, 1955, and appellees did not amend their complaint to refer to the Hyland-Stanford contract until January 31, 1956 (during the last few days of the trial) or to the Mission Dry contract until February 4, 1956 (after all the evidence was in), and such long delay was prejudicial to appellants.

Fifth: Appellees are barred by laches and estopped from alleging the new matters in the last paragraph of III(f) of the first cause of action (referred to in (f) above), because appellees knew of such matters through discovery long before trial and did not seek to amend its complaint to refer thereto until January 31, 1956, to appellants' surprise and prejudice, and such long delay was prejudicial to appellants.

This is a long record before us, and the matter is as complicated, both factually and legally, as is most antitrust litigation. We attempt to summarize the appellees' position by first stating what it was not. It was not appellees' position that appellants did not have certain exemptions from the antitrust laws under the Clayton and Capper-Volstead...